Raising Financially Smart Kids

Parents play critical roles in supporting their children’s educational journeys, but sometimes, certain life skills don’t get the attention they deserve. For example, it’s common for young adults to have little knowledge about balancing checkbooks and paying off student loans.

Children develop financial habits at a young age, often modeling their behavior after what they see at home. If you aren’t used to discussing money and don’t manage money effectively, we strongly suggest changing your approach. As parents, guiding your kids toward financial literacy is one of the most valuable life lessons you can impart.

With Gen Z — people born between 1997-2012 — already influencing spending trends and approaching money differently than previous generations, it’s clear that parents must play an active role in shaping responsible financial habits. The first step is understanding the Gen Z/money relationship.

Understanding How Kids Spend Money Today

The way kids and teens manage money today is different from even a decade ago, so we can’t expect them to turn back the clock. That’s not a bad thing; the rise of nontraditional, online banking and the preference for cryptocurrency over stocks have defined Gen Z money trends. Pocket money is no longer just physical cash — it’s often transferred via apps like Venmo or Cash App, giving kids and teens early exposure to digital financial tools.

Today, getting a credit card is easier than ever before, and using one responsibly is a good way to build a good score. However, Gen Z-ers still rely on debit cards, but checking the linked account balance is vital. As for spending habits, these young consumers support socially responsible businesses that support human rights and eco-friendly policies. They also prefer shopping online, and 4% purchase real estate. Education holds importance for them, but many choose less costly, non-traditional educational paths like trade schools and online courses.

Still, Gen Z has shown a strong interest in saving and earning from a young age, often motivated by goals such as starting side hustles or purchasing their favorite tech gadgets. However, balancing short-term gratification with long-term goals and managing peer pressure around spending remain hurdles.

Teaching Kids Smart Money Habits from an Early Age

Now that you can relate to that Gen Z money mindset, it’s never too early (or late) to lay the groundwork for lifelong financial health:

• Set up allowances and budgeting exercises: Giving your child a weekly or monthly allowance is a great starting point. Consider tying the allowance to specific responsibilities or chores to make it meaningful.
• Differentiate between needs and wants: Kids should learn to distinguish between what’s essential and what’s a luxury. For example, groceries and school supplies fall under needs, while the latest video game or trendy clothes might be considered wants. Have conversations that encourage your child to prioritize purchases based on importance.
• Encourage saving for long-term goals: Delayed gratification is a skill worth cultivating, no matter how old you are. If your child wants a big-ticket item, help them set a savings goal and track their progress.

Creating an environment where budgeting and saving are normalized allows you to prepare your children for smarter financial decision-making later in life.

Talking to Kids About College Costs and Financial Planning

As your kids approach their teenage years, college costs become increasingly relevant. Tuition prices, scholarships, and loans can seem overwhelming, but talking to your kids about how to pay for college can prepare them for what’s ahead.

Even if your child is years away from college, understanding college funding hacks early on can be helpful. Discuss tuition, housing, and books and how scholarships or grants can help cover these expenses. Show how setting spending limits influences college costs decision-making; don’t overspend on unnecessary things when you’re with them.

Many students underestimate how long it can take to pay off loans. Explain the long-term implications of student debt. Encourage kids to think about how their college decisions, including their major and school, might impact their future financial stability. That way, you empower your child to make informed choices about their education.

Tools and Resources for Parents To Help Kids Plan Financially

We get it; figuring out how to pay for college is challenging. Fortunately, teaching financial literacy and maximizing the impact of college funding hacks is easier when you have the right tools. From budgeting apps to savings plans, many resources can support your efforts.

• Budgeting apps and tools: Apps like Greenlight and FamZoo are designed specifically for kids and teens, teaching them how to track their spending and set savings goals. These tools can make financial lessons engaging and interactive.
• Savings accounts or investment plans: Opening a savings account for your child can encourage them to take ownership of their money. As they grow older, you can introduce investment accounts like 529 college savings plans designed for education-related expenses. You can also set up a Uniform Gifts to Minors Act (UGMA), a custodial account that lets parents transfer assets to kids. The Meet Fabric platform makes setting that up easy; it has a user-friendly interface and offers peace of mind.
• Financial planning services: Consulting with financial planners specializing in education savings can provide clarity and direction. They can help you establish a timeline, set realistic savings goals, and explore additional funding options.

Combining online, accessible tools with real-world practices creates a well-rounded foundation for your family’s long-term financial success.

Setting the Stage for Your Children’s Financial Success

Raising financially responsible kids doesn’t happen overnight, but the rewards are worth the effort. By teaching your children to save, budget, and think critically about their financial choices, you give them the skills they’ll need to thrive as adults.

Start with small steps, like setting up an allowance or discussing savings, and build from there. Make financial discussions a consistent part of your family’s routine so your kids grow up understanding the value of smart money management before and after college. Start by opening up the conversation—and watch your kids grow into confident, financially savvy young adults.